Chapter 4

Which of the following statements is incorrect concerning the worksheet?

• The worksheet is essentially a working tool of the accountant.

• The worksheet is distributed to management and other interested parties.

• The worksheet cannot be used as a basis for posting to ledger accounts.

• Financial statements can be prepared directly from the worksheet before journalizing and posting the adjusting entries.

In a worksheet, net income is entered in the following

columns:

• income statement (Dr) and statement of financial position (Dr).

• income statement (Cr) and statement of financial position (Dr).

• income statement (Dr) and statement of financial position (Cr).

• income statement (Cr) and statement of financial position (Cr).

In the unadjusted trial balance of its worksheet for the year ended December 31, 2025, Kim Company reported Equipment of NT$120,000. The year-end adjusting entries require an adjustment of NT$15,000 for depreciation expense for the equipment. After the adjusted trial balance is completed, what amount should be shown in the financial statement columns?

• A debit of NT$105,000 for Equipment in the statement of financial position column.

• A credit of NT$15,000 for Depreciation Expense in the income statement column.

• A debit of NT$120,000 for Equipment in the statement of financial position column.

• A debit of NT$15,000 for Accumulated Depreciation-Equipment in the statement of financial position column.

An account that will have a zero balance after closing entries have been journalized and posted is:

• Service Revenue.

• Supplies.

• Prepaid Insurance.

• Accumulated Depreciation-Equipment.

When a net loss has occurred, Income Summary is:

• debited and Retained Earnings is credited.

• credited and Retained Earnings is debited.

• debited and Dividends is credited.

• credited and Dividends is debited.

The closing process involves separate entries to close

(1) expenses, (2) dividends, (3) revenues, and (4) income summary.

The correct sequencing of the entries is:

• (4), (3), (2), (1).

• (1), (2), (3), (4).

• (3), (1), (4), (2).

• (3), (2), (1), (4).

Which types of accounts will appear in the post-closing trial balance?

• Permanent (real) accounts.

• Temporary (nominal) accounts.

• Accounts shown in the income statement columns of a work-sheet.

• None of these answer choices is correct.

All of the following are required steps in the accounting cycle except:

• journalizing and posting closing entries.

• preparing financial statements.

• journalizing the transactions.

• preparing a worksheet.

The proper order of the following steps in the accounting cycle is:

• prepare unadjusted trial balance, journalize transactions, post to ledger accounts, journalize and post adjusting entries.

• journalize transactions, prepare unadjusted trial balance, post to ledger accounts, journalize and post adjusting entries.

• journalize transactions, post to ledger accounts, prepare unadjusted trial balance, journalize and post adjusting entries.

• prepare unadjusted trial balance, journalize and post adjusting entries, journalize transactions, post to ledger accounts.

When Lopez Company purchased supplies worth $600, it incorrectly recorded a credit to Supplies for $6,000 and a debit to Cash for $6,000. Before correcting this error:

• Cash is overstated and Supplies is overstated.

• Cash is understated and Supplies is understated.

• Cash is understated and Supplies is overstated.

• Cash is overstated and Supplies is understated.